Trade continues to debate the USDA planting projection for corn of 95.9 million acres. This would be the most corn acres planted in the United States since 1937.

We need to remember that this number will change, however, especially if new-crop soybean values continue to rally. The revised figure from the USDA will be released in June, and will be a more accurate total.

We also need to remember both the corn and soybean acreage numbers are just estimates, and will be altered by lost production, most likely from adverse weather during the growing season.

The new-crop corn and soybean price ratio is starting to favor the planting of soybeans. In recent weeks this ratio has widened to 2.53:1; this means it now takes 2.53 bushels of new-crop corn to equal the value of one bushel of soybeans.

Historically, a ratio of 2.5:1 will cause a shift in acres. The acres that would likely shift first are ones that would be planted into a second year of corn production.

Chinese corn production has been on a steady increase in recent years, but has a long way to go to catch other producers. Last year, China produced 7.55 billion bushels of corn, from a yield of just 90.8 bushels per acre. China’s corn yield has increased over recent years, but at a rate of just two bushels per year.

While China will eventually be able to cover most of its corn needs, at this rate of improvement it will mean several years of imports until this is accomplished.

Some of the measures China is taking to increase all yields are mechanized farming equipment and improved input usage. Economists claim the greatest change China could make to increase corn yield would be the use of genetically modified seeds.

Corn use for ethanol remains a disputed topic in that complex. Current corn usage and ethanol production numbers indicate a marketing year demand total of 5.15 billion bushels. The USDA currently projects yearly corn use at five billion bushels. The reason behind the lower use number could be the fact that improved genetics and ethanol manufacturing processes mean more fuel from fewer bushels.

The U.S. Environmental Protection Agency (EPA) has taken a step in promoting the use of E15 gasoline. The agency has approved registrations for the production, sale and use in vehicles that are newer than 2001.

By doing this, the ethanol industry believes ethanol consumption will increase and prevent the market from becoming oversaturated with product, as well as lessen the United States’ dependency on foreign oil. The EPA stopped short of requiring the use of E15 though, which may limit the fuel’s acceptance.

Global economics have had just as much of an impact on commodity futures in recent weeks as traditional fundamentals. The greatest concern in the world economy has been with China and the European Union.

There are now concerns with Brazil, and how inflation in that country could limit ag investing and production. Concerns over these economies have brought investors to the U.S. dollar, which in turn has elevated the cost of our commodities in the world market.

Consumers and economists have long blamed the rising cost of meat in stores on elevated feed grain values caused by the surge in ethanol production. While ethanol manufacturing has in fact raised the price of corn in some regions, it is not the only reason in higher meat costs.

One that is starting to receive more attention is regulation over how animals are raised and transported. These regulations may in fact be needed, but the cost of changing them will be passed back to the U.S. consumer.

Karl Setzer is a Commodity Trading Advisor/Market Analyst at MaxYield Cooperative. His commentary and market analysis is available daily on radio, in newsprint and on the Internet at www.MaxYieldCooperative.com

The opinions and views in this commentary are solely those of Karl Setzer. Data used for this commentary obtained from various sources believed to be accurate.

This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position.